New Jersey Valve Company manufactured 7,400 units during January of a control valve used by milk processors in its Camden plant. Records indicated the following: Direct labor Direct material purchased Direct material used The control valve has the following standard prime costs: Direct material Direct labor Standard prime cost per unit 45,300 hour at $15.40 per hour 32,000 pounds at $2.80 per pound 29,300 pounds 4 pounds at $2.70 per pound 6 hour at $15.80 per hour $ 10.80 94.80 $ 105.60 Required: 1. Prepare a schedule of standard production costs for January, based on actual production of 7,400 units. 2. For the month of January, compute the following variances.
New Jersey Valve Company manufactured 7,400 units during January of a control valve used by milk processors in its Camden plant. Records indicated the following: Direct labor Direct material purchased Direct material used The control valve has the following standard prime costs: Direct material Direct labor Standard prime cost per unit 45,300 hour at $15.40 per hour 32,000 pounds at $2.80 per pound 29,300 pounds 4 pounds at $2.70 per pound 6 hour at $15.80 per hour $ 10.80 94.80 $ 105.60 Required: 1. Prepare a schedule of standard production costs for January, based on actual production of 7,400 units. 2. For the month of January, compute the following variances.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
2. For the month of January, compute the following variances.
Transcribed Image Text:**New Jersey Valve Company Production Analysis**
The New Jersey Valve Company manufactured 7,400 units in January of a control valve used by milk processors at the Camden plant. The records provided indicate the following:
- **Direct Labor:** 45,300 hours at $15.40 per hour
- **Direct Material Purchased:** 32,000 pounds at $2.80 per pound
- **Direct Material Used:** 29,300 pounds
The control valve has the following standard prime costs:
- **Direct Material:** 4 pounds at $2.70 per pound = $10.80
- **Direct Labor:** 6 hours at $15.80 per hour = $94.80
The **Standard Prime Cost per Unit** is:
- $105.60
**Required:**
1. **Prepare a schedule of standard production costs for January,** based on the actual production of 7,400 units.
2. **Compute the following variances for the month of January.**
Transcribed Image Text:**January Variance Computation Guide**
For the month of January, compute the following variances:
**Instructions:**
Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).
**Variance Categories:**
a. Direct-material price variance
b. Direct-material quantity variance
c. Direct-material purchase price variance
d. Direct-labor rate variance
e. Direct-labor efficiency variance
**Notes:**
- Use the provided fields to record your assessment of each type of variance.
- Click on the arrows to navigate between Required 1 and Required 2 sections as needed.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 7 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education